Traditionally, business insurance creates a financial cushion against property damage, accident liability, and disruptions to daily operations. Though you hope never to need it, insurance policies provide a critical safety net that can be the difference between a business surviving a setback and falling into financial ruin. Cyber insurance for small business offers the digital equivalent of traditional insurance. Given the economic impacts of cybercrime and the elevated cyber risks faced by SMBs, cyber insurance is essential to an organization's security and long-term financial health.
Why cyber insurance?
Web-based services and third-party service providers can help SMBs expand their business (and profit margins). But an expanded digital footprint also expands their vulnerability to cybercrime. Sadly, cyber security incidents and data breaches are routine for SMBs. Cybercriminals steal billions of credentials and personal data annually, causing the loss of billions of dollars due to identity fraud and financial theft. When they sell that stolen data on the dark web, more cybercriminals can then hack into corporate networks and steal more data. It's a vicious cycle. And unfortunately, SMBs remain a common target. According to Accenture, SMBs account for 43% of cyber attacks. Their comparative lack of resources and weaker cyber security infrastructure make them easy victims. Moreover, responding to and recovering from a data breach can strain a company when it lacks cybersecurity expertise and cyber insurance to offset losses. While larger enterprises have the financial and human resources to absorb the impact of a cyber incident, SMBs often do not. As a result, profits can be depressed for years following a cyber incident, and some businesses never recover.What cyber insurance offers SMBs
Cyber insurance provides businesses with the resources and financial support to respond to and recover from cyber security incidents. Comprehensive cyber insurance for small businesses will typically cover data breaches and cyber attacks on corporate databases and networks. It may also cover cyber attacks on company data held by vendors or third parties. In addition, companies should look for cyber insurance that will help with legal proceedings, customer notification and crisis PR, digital forensics and data recovery, and coverage for financial losses. The type of insurance policy needed can vary depending on the company's size, industry, type of data stored, and risk exposure. For example, first-party cyber insurance protects the company and its assets, while third-party cyber insurance protects the company from others bringing claims against the company. In addition, SMBs may not realize that government agencies may investigate a security incident and require hefty fines or penalties. Though businesses are not often required to carry cyber insurance to operate, it can help substantially offset their digital security risks. Even as budgets tighten and priorities shift, companies should view cyber insurance as a standard cost of doing business in the digital age.Pairing cyber insurance with cyber security
Acquiring cyber insurance often means a company needs to meet strict cyber security requirements. Insurance providers want to ensure that companies aren't using cyber insurance in place of effective IT security measures. For companies to be eligible for cyber insurance, they may be required to enable multifactor authentication for account protection, improve credential management, and implement more stringent device and network security like firewalls, antivirus, and data backup. Meeting these requirements serves a dual purpose. Not only do companies become eligible for coverage, but they also reduce their overall cyber risk. As an added perk, businesses may have lower cyber insurance premiums as their overall cyber risk decreases. Cyber security and cyber insurance go hand-in-hand. A good foundation of cybersecurity best practices will help a business minimize overall risk. Cyber insurance cushions the financial impact of a cyber incident while providing needed resources to help the business bounce back as quickly and effectively as possible. When paired together, cyber security and cyber insurance help SMBs better prepare for and successfully navigate a worst-case scenario. This Cybersecurity Awareness Month, learn more about how LastPass can help you meet cyber insurance requirements and minimize cyber risk for your organization.